Resource-Based View (RBV) - Revision history

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The '''Resource-Based View (RBV)''' of the [[Organization|organization]] is a [[Strategy|strategy]] for achieving [[Competitive Advantage|competitive advantage]] that emerged during the 1980s and 1990s, following the works of academics and businessmen such as Birger Wernerfelt, Prahalad and Hamel, Spender and Grant. The core idea of the theory is that instead of looking at the competitive business environment to get a niche in the [[Market|market]] or an edge over competition and threats, the organization should instead look within at the resources and potential it already has available.<ref>Definition - What Does Resource-Based View Mean? [https://www.businessballs.com/strategy-innovation/resource-based-view/ Business Balls]</ref>

Explaining the Resource-Based View Model<ref>Explaining the Resource-Based View Model [https://strategicmanagementinsight.com/topics/resource-based-view.html SMI]</ref><br />
The following model explains RBV and emphasizes the key points of it.

[[File:Resource-based View Model.png|400px|Resource-based View Model]]<br />
source: Strategic Management Insights

According to RBV proponents, it is much more feasible to exploit external opportunities using existing resources in a new way rather than trying to acquire new skills for each different opportunity. In RBV model, resources are given the major role in helping companies to achieve higher organizational performance. There are two types of resources: tangible and intangible.

Tangible assets are physical things. Land, buildings, machinery, equipment and capital – all these assets are tangible. Physical resources can easily be bought in the market so they confer little advantage to the companies in the long run because rivals can soon acquire the identical assets.

Intangible assets are everything else that has no physical presence but can still be owned by the company. Brand reputation, trademarks, intellectual property are all intangible assets. Unlike physical resources, brand reputation is built over a long time and is something that other companies cannot buy from the market. Intangible resources usually stay within a company and are the main source of sustainable competitive advantage.

The two critical assumptions of RBV are that resources must also be heterogeneous and immobile.

Heterogeneous. The first assumption is that skills, capabilities and other resources that organizations possess differ from one company to another. If organizations would have the same amount and mix of resources, they could not employ different strategies to outcompete each other. What one company would do, the other could simply follow and no competitive advantage could be achieved. This is the scenario of perfect competition, yet real world markets are far from perfectly competitive and some companies, which are exposed to the same external and competitive forces (same external conditions), are able to implement different strategies and outperform each other. Therefore, RBV assumes that companies achieve competitive advantage by using their different bundles of resources.

The competition between Apple Inc. and Samsung Electronics is a good example of how two companies that operate in the same industry and thus, are exposed to the same external forces, can achieve different organizational performance due to the difference in resources. Apple competes with Samsung in tablets and smartphones markets, where Apple sells its products at much higher prices and, as a result, reaps higher profit margins. Why Samsung does not follow the same strategy? Simply because Samsung does not have the same brand reputation or is capable to design user-friendly products like Apple does. (heterogeneous resources)

Immobile. The second assumption of RBV is that resources are not mobile and do not move from company to company, at least in short-run. Due to this immobility, companies cannot replicate rivals’ resources and implement the same strategies. Intangible resources, such as brand equity, processes, knowledge or intellectual property are usually immobile.

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 The '''Resource-Based View (RBV)''' (aka Resource-Based Theory) of the [[Organization|organization]] is a [[Strategy|strategy]] for achieving [[Competitive Advantage|competitive advantage]] that emerged during the 1980s and 1990s, following the works of academics and businessmen such as Birger Wernerfelt, Prahalad and Hamel, Spender and Grant. The core idea of the theory is that instead of looking at the competitive business environment to get a niche in the [[Market|market]] or an edge over competition and threats, the organization should instead look within at the resources and potential it already has available.<ref>Definition - What Does Resource-Based View Mean? [https://www.businessballs.com/strategy-innovation/resource-based-view/ Business Balls]</ref>
-'''Resource-based theory''' contends that the possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages over its rivals. These competitive advantages in turn can help the organization enjoy strong profits. Resource-based theory also stresses the merit of an old saying: the whole is greater than the sum of its parts. Specifically, it is also important to recognize that strategic resources can be created by taking several [[Strategy|strategies]] and [[Resource|resources]] that each could be copied and bundling them together in a way that cannot be copied.<ref>Definition: What is Resource-Based Theory? [https://saylordotorg.github.io/text_mastering-strategic-management/s08-01-resource-based-theory.html Saylordotorg]</ref>
+'''Resource-based theory''' contends that the possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages over its rivals. These competitive advantages in turn can help the organization enjoy strong profits. Resource-based theory also stresses the merit of an old saying: the whole is greater than the sum of its parts. Specifically, it is also important to recognize that strategic resources can be created by taking several [[Strategy|strategies]] and resources that each could be copied and bundling them together in a way that cannot be copied.<ref>Definition: What is Resource-Based Theory? [https://saylordotorg.github.io/text_mastering-strategic-management/s08-01-resource-based-theory.html Saylordotorg]</ref>
 Resource-based theory, in other words, is regarded as one of the process which is based on inside-out strategy. The strategy focuses on the methods through which the firm collects resources (Das & Bing-Sheng 2000). The following diagram given below describes the formulation process of the resource based theory:

← Older revision		Revision as of 19:30, 11 April 2021
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−	''What Resources Drive Competitive Advantage''<ref>What Resources Drive Competitive Advantage? [https://bizfluent.com/13725649/resource-based-view-definition-advantages-disadvantages Bizfluent]</ref>	+	''What Resources Drive Competitive Advantage''<ref>What Resources Drive Competitive Advantage? [https://bizfluent.com/13725649/resource-based-view-definition-advantages-disadvantages Bizfluent]</ref><br />
	The resource-based view has been widely applied to numerous areas of [[Strategic Management\|strategic management]]. According to this theory, each firm has different resources and thus may use different strategies to accomplish its goals. The extent to which these resources can be substituted or imitated determines whether or not your business can achieve sustainable competitive advantage.		The resource-based view has been widely applied to numerous areas of [[Strategic Management\|strategic management]]. According to this theory, each firm has different resources and thus may use different strategies to accomplish its goals. The extent to which these resources can be substituted or imitated determines whether or not your business can achieve sustainable competitive advantage.

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 The '''Resource-Based View (RBV)''' (aka Resource-Based Theory) of the [[Organization|organization]] is a [[Strategy|strategy]] for achieving [[Competitive Advantage|competitive advantage]] that emerged during the 1980s and 1990s, following the works of academics and businessmen such as Birger Wernerfelt, Prahalad and Hamel, Spender and Grant. The core idea of the theory is that instead of looking at the competitive business environment to get a niche in the [[Market|market]] or an edge over competition and threats, the organization should instead look within at the resources and potential it already has available.<ref>Definition - What Does Resource-Based View Mean? [https://www.businessballs.com/strategy-innovation/resource-based-view/ Business Balls]</ref>
-'''Resource-based theory''' contends that the possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages over its rivals. These competitive advantages in turn can help the organization enjoy strong profits. Resource-based theory also stresses the merit of an old saying: the whole is greater than the sum of its parts. Specifically, it is also important to recognize that strategic resources can be created by taking several strategies and resources that each could be copied and bundling them together in a way that cannot be copied.<ref>Definition: What is Resource-Based Theory? [https://saylordotorg.github.io/text_mastering-strategic-management/s08-01-resource-based-theory.html Saylordotorg]</ref>
+'''Resource-based theory''' contends that the possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages over its rivals. These competitive advantages in turn can help the organization enjoy strong profits. Resource-based theory also stresses the merit of an old saying: the whole is greater than the sum of its parts. Specifically, it is also important to recognize that strategic resources can be created by taking several [[Strategy|strategies]] and [[Resource|resources]] that each could be copied and bundling them together in a way that cannot be copied.<ref>Definition: What is Resource-Based Theory? [https://saylordotorg.github.io/text_mastering-strategic-management/s08-01-resource-based-theory.html Saylordotorg]</ref>
-Explaining the Resource-Based View Model<ref>Explaining the Resource-Based View Model [https://strategicmanagementinsight.com/topics/resource-based-view.html SMI]</ref><br />
 The following model explains RBV and emphasizes the key points of it.
@@ Line 13: / Line 34: @@
 According to RBV proponents, it is much more feasible to exploit external opportunities using existing resources in a new way rather than trying to acquire new skills for each different opportunity. In RBV model, resources are given the major role in helping companies to achieve higher organizational performance. There are two types of resources: tangible and intangible.
-*Tangible assets are physical things. Land, buildings, machinery, equipment and capital – all these assets are tangible. Physical resources can easily be bought in the market so they confer little advantage to the companies in the long run because rivals can soon acquire the identical assets.
+*Tangible assets are physical things. Land, buildings, machinery, equipment and [[Capital|capital[[ – all these assets are tangible. Physical resources can easily be bought in the market so they confer little advantage to the companies in the long run because rivals can soon acquire the identical assets.
-*Intangible assets are everything else that has no physical presence but can still be owned by the company. Brand reputation, trademarks, intellectual property are all intangible assets. Unlike physical resources, brand reputation is built over a long time and is something that other companies cannot buy from the market. Intangible resources usually stay within a company and are the main source of sustainable competitive advantage.
+*Intangible assets are everything else that has no physical presence but can still be owned by the company. Brand reputation, trademarks, intellectual property are all intangible assets. Unlike physical resources, [[Brand Reputation|brand reputation]] is built over a long time and is something that other companies cannot buy from the market. Intangible resources usually stay within a company and are the main source of sustainable competitive advantage.
 The two critical assumptions of RBV are that resources must also be heterogeneous and immobile.
 *Heterogeneous. The first assumption is that skills, capabilities and other resources that organizations possess differ from one company to another. If organizations would have the same amount and mix of resources, they could not employ different strategies to outcompete each other. What one company would do, the other could simply follow and no competitive advantage could be achieved. This is the scenario of perfect competition, yet real world markets are far from perfectly competitive and some companies, which are exposed to the same external and competitive forces (same external conditions), are able to implement different strategies and outperform each other. Therefore, RBV assumes that companies achieve competitive advantage by using their different bundles of resources.
 The competition between Apple Inc. and Samsung Electronics is a good example of how two companies that operate in the same industry and thus, are exposed to the same external forces, can achieve different organizational performance due to the difference in resources. Apple competes with Samsung in tablets and smartphones markets, where Apple sells its products at much higher prices and, as a result, reaps higher profit margins. Why Samsung does not follow the same strategy? Simply because Samsung does not have the same brand reputation or is capable to design user-friendly products like Apple does. (heterogeneous resources)
 *Immobile. The second assumption of RBV is that resources are not mobile and do not move from company to company, at least in short-run. Due to this immobility, companies cannot replicate rivals’ resources and implement the same strategies. Intangible resources, such as brand equity, processes, knowledge or intellectual property are usually immobile.
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 Although the literature presents many different ideas around the concept of the resource-advantage perspective, at its heart, the common theme is that the firm's resources are financial, legal, human, organizational, informational and relational; resources are heterogeneous and imperfectly mobile and that management's key task is to understand and organize resources for sustainable competitive advantage.[10] Key theorists who have contributed to the development of a coherent body of literature include Jay B. Barney, George S. Day, Gary Hamel, Shelby D. Hunt, G. Hooley and C.K. Prahalad.

← Older revision		Revision as of 18:52, 11 April 2021
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	Although the literature presents many different ideas around the concept of the resource-advantage perspective, at its heart, the common theme is that the firm's resources are financial, legal, human, organizational, informational and relational; resources are heterogeneous and imperfectly mobile and that management's key task is to understand and organize resources for sustainable competitive advantage.[10] Key theorists who have contributed to the development of a coherent body of literature include Jay B. Barney, George S. Day, Gary Hamel, Shelby D. Hunt, G. Hooley and C.K. Prahalad.		Although the literature presents many different ideas around the concept of the resource-advantage perspective, at its heart, the common theme is that the firm's resources are financial, legal, human, organizational, informational and relational; resources are heterogeneous and imperfectly mobile and that management's key task is to understand and organize resources for sustainable competitive advantage.[10] Key theorists who have contributed to the development of a coherent body of literature include Jay B. Barney, George S. Day, Gary Hamel, Shelby D. Hunt, G. Hooley and C.K. Prahalad.
		+
		+
		+	===See Also===
		+	[[VRIO Framework]]<br />
		+	[[Contingency Theory]]<br />
		+	[[Disruptive Innovation]]<br />
		+	[[Disruptive Technology]]<br />
		+	[[First-Mover Advantage (FMA)]]<br />
		+	[[X-Efficiency]]<br />
		+	[[Upper Echelons Theory]]<br />
		+	[[Stewardship Theory]]<br />
		+	[[Agency Theory]]<br />
		+	[[Five Case Model]]<br />
		+	[[Five Disciplines]]<br />
		+	[[Five Forces CRM Model]]<br />
		+	[[Five Forces Model]]<br />
		+	[[Five Whys]]<br />
		+	[[Five W's]]<br />
		+	[[Resource Scarcity Theory]]<br />
		+	[[Resource Dependence Theory]]<br />
		+	[[Resource Access Control Facility (RACF)]]<br />
		+	[[Resource Allocation]]<br />
		+	[[Resource Description Framework (RDF)]]<br />
		+	[[Resource Management]]<br />
		+
		+
		+	===References===
		+	<references/>

← Older revision		Revision as of 18:38, 11 April 2021
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−	The '''Resource-Based View (RBV)''' of the [[Organization\|organization]] is a [[Strategy\|strategy]] for achieving [[Competitive Advantage\|competitive advantage]] that emerged during the 1980s and 1990s, following the works of academics and businessmen such as Birger Wernerfelt, Prahalad and Hamel, Spender and Grant. The core idea of the theory is that instead of looking at the competitive business environment to get a niche in the [[Market\|market]] or an edge over competition and threats, the organization should instead look within at the resources and potential it already has available.<ref>Definition - What Does Resource-Based View Mean? [https://www.businessballs.com/strategy-innovation/resource-based-view/ Business Balls]</ref>	+	The '''Resource-Based View (RBV)''' (aka Resource-Based Theory) of the [[Organization\|organization]] is a [[Strategy\|strategy]] for achieving [[Competitive Advantage\|competitive advantage]] that emerged during the 1980s and 1990s, following the works of academics and businessmen such as Birger Wernerfelt, Prahalad and Hamel, Spender and Grant. The core idea of the theory is that instead of looking at the competitive business environment to get a niche in the [[Market\|market]] or an edge over competition and threats, the organization should instead look within at the resources and potential it already has available.<ref>Definition - What Does Resource-Based View Mean? [https://www.businessballs.com/strategy-innovation/resource-based-view/ Business Balls]</ref>
		+
		+	'''Resource-based theory''' contends that the possession of strategic resources provides an organization with a golden opportunity to develop competitive advantages over its rivals. These competitive advantages in turn can help the organization enjoy strong profits. Resource-based theory also stresses the merit of an old saying: the whole is greater than the sum of its parts. Specifically, it is also important to recognize that strategic resources can be created by taking several strategies and resources that each could be copied and bundling them together in a way that cannot be copied.<ref>Definition: What is Resource-Based Theory? [https://saylordotorg.github.io/text_mastering-strategic-management/s08-01-resource-based-theory.html Saylordotorg]</ref>